As you plan for your future, it’s important to be aware of market forces that could impact your long-term financial health. One such force is rising oil prices, which impact a wide range of expenses, including gasoline and diesel costs, home heating and utilities, air and ground transportation, groceries, consumer goods, shipping costs, food production and overall inflation. As households are forced to allocate a higher percentage of their income to these rising expenses, Americans have fewer dollars available for saving and discretionary spending.

While the recent volatility in oil prices is concerning, we’ve experienced similar periods of volatility in the past. How does past volatility compare to today’s? Let’s consider a few key time periods.

The 1970s Oil Crises

For some historical context, let’s compare today’s oil situation with that of the 1970s. In 1973, the Arab oil embargo, which was tied to the Yom Kippur War, removed approximately 4.5 million barrels per day (mb/d), or around 7% of global supply. This resulted in a rise of nominal oil prices from $3 per barrel to more than $12 within months. Adjusted for inflation, this equals an increase from approximately $22 to $80 today.

Oil prices were further impacted by the 1979 Iranian Revolution, which slashed output and pushed the price per barrel to $40 nominal, or more than $160 inflation-adjusted.

The impacts of this oil volatility included oil rationing, double-digit inflation and a severe recession that defined the era. Because the United States was heavily dependent on oil imports with limited domestic production capabilities, the Organization of the Petroleum Exporting Countries (OPEC) wielded outsized power over our oil supply. These shocks amplified “stagflation,” or the simultaneous combination of high inflation and unemployment, which prompted aggressive Fed interest rate hikes and long-term policy shifts toward energy efficiency and diversification.

What’s Happening Today

The impact of the war in Iran and disruptions to the Strait of Hormuz are reminding many economists of the turbulence experienced in the 1970s. The closing of the strait represents the largest oil supply disruption in history, with global oil distribution dropping by 10.1 mb/d in March 2026 alone. As of mid-April, crude oil hovers around $97 per barrel, with recent swings reaching as high as $130. This represents a greater than 50% increase over pre-conflict levels of approximately $66 per barrel. Volatility remains high as talks of a potential ceasefire circulate.

However, one positive is that the United States is currently a net exporter of crude and petroleum products, producing approximately 13.5 mb/d.

Lessons From Other Key Time Periods

As we speculate about the potential long-term impact of today’s oil price volatility, it’s helpful to consider lessons learned from other periods of volatility, including the following.

• 2008 – Speculative demand surge combined with the financial crisis drove oil prices to $147 nominal, $189 inflation-adjusted. The subsequent market crash amplified an already precarious situation, resulting in a recession. The lesson learned from this time period is that oil spikes can coincide with, but not necessarily cause, broader market stress.

• 2014-2016 – During this time period, OPEC flooded the market in an effort to counter U.S. shale production. As a result, prices collapsed to less than $30 per barrel. From this situation, we learned that oversupply punishes producers.

• 2020 – During the COVID era, global demand for oil evaporated as lockdowns halted travel and economic activity. At the same time, plenty of oil was still being produced, which led to storage shortages and caused the futures price to drop below zero, briefly reaching -$37 per barrel. This was the first time in history that oil futures prices went negative. This situation highlighted that extreme demand shocks, combined with physical constraints such as a lack of storage, can create chaotic market conditions.

• 2022 – During the height of the Russia-Ukraine conflict, supply fears pushed oil prices to $139 per barrel. Markets quickly adjusted with increased diversification, which allowed prices to settle. This situation illustrates that geopolitical shocks can be shorter-lived than anticipated if alternative sources of oil exist.

How We’re Supporting Our Clients Through Oil Price Volatility

At Freedom Wealth Management, we believe the current environment highlights the importance of using selective energy exposure in upstream producers and midstream infrastructure as a hedge against volatility. However, we seek to avoid over-concentration in energy, as this can expose our clients’ portfolios to unnecessary risk. We strive to use commodities, inflation-protected securities and diversified alternatives to help buffer the effects of broad inflation. We’re also carefully monitoring strategic petroleum reserves, OPEC moves and ceasefire developments in order to proactively respond to potential sharp price reversals.

Unlike in the 1970s, we believe recent shocks in oil prices are unlikely to trigger sustained stagflation or force drastic policy changes. Although prolonged disruption could impact global growth, markets have historically rewarded patience through periods of oil volatility. While we will be carefully monitoring future developments, we continue to believe that a properly diversified investment portfolio can help buffer the long-term impact of oil volatility.

If you’re interested in stress-testing your portfolio against various scenarios, please schedule a call with a member of our team.